Is McKinsey a political headache for Justin Trudeau?
McKinsey #McKinsey
The Liberal government has come under fire over revelations the consulting firm McKinsey and Company has received a sharp increase in federal contracts since 2015.
During Prime Minister Justin Trudeau’s seven years in office, federal contracts with McKinsey have amounted to at least $116.8 million, according to reporting by the Globe and Mail. That estimate is a nearly 60-fold increase from prime minister Stephen Harper’s nine-year tenure, when the total value of federal contracts awarded to the firm was $2.2-million.
On Wednesday, Dominic Barton, a former global managing director of the consulting giant — who Trudeau later appointed as Canada’s ambassador to China — will take questions from the House of Commons committee on government operations and estimates.
Opposition MPs will likely grill Barton on his relationship with the prime minister and whether the company has undue influence over public policy.
What does McKinsey do?
Founded in 1926, McKinsey is a New York-based firm with tens of thousands of consultants and more than 130 offices across 65 countries. It works with public and private sector clients in industries including energy, finance and retail services.
Why is it controversial?
McKinsey has been criticized for its work with tobacco companies, opioid manufacturers and Saudi Arabia, for which it reportedly identified regime critics who were subsequently silenced by the government.
The company’s penchant for client confidentiality has drawn allegations of conflicts of interest. Radio-Canada reported that when the company advised Quebec on its pandemic response, the contract stipulated that McKinsey would not reveal its other clients — one of which was COVID-19 vaccine manufacturer Pfizer.
McKinsey says it had strict policies that prevent conflicts of interest, and follows additional protocols when working with the public sector. “If potential conflicts cannot be appropriately mitigated, we will not do the work,” it said in an emailed statement to the Star.
Is contracting out a new trend?
Although McKinsey’s business with Ottawa has increased dramatically since Trudeau took office, other consulting firms have recently collected far more money through federal contracts.
In the 2021-22, Deloitte, PricewaterhouseCoopers and Accenture received $172 million, $115 million and $94 million respectively, according to a Carleton University analysis.
The Professional Institute of the Public Service of Canada found that spending on consultants approached $1 billion during some years of the Harper government.
McKinsey’s growing presence — as well as questions about its potential influence on public policy — has put Barton’s proximity to the governing Liberals under intense scrutiny.
Barton served as the firm’s global managing director from 2009 to 2018, the latter two years of which he was chair of a government advisory council on economic growth. In 2019, he was appointed Canada’s ambassador to China, a post he held until 2021.
Barton’s advisory council encouraged Ottawa to dramatically ramp up immigration levels to 450,000 per year by 2030. Last fall, the government announced plans to accept 500,000 people each year by 2025.
In a statement this month, McKinsey said it did not make policy recommendations on immigration or any other topic. It said it focuses on “core management topics, such as digitization and operations improvement.”
While Trudeau said contracting with private companies is a normal government practice, he announced on Jan. 12 that he had asked Procurement Minister Helena Jaczek and Treasury Board President Mona Fortier to make sure the McKinsey contracts were awarded properly.
Six days later, members of the Government Operations Committee voted unanimously to study the contracts.
What are the potential issues with hiring consultants?
Governments traditionally hire consultants when civil servants are unable to accommodate certain work, due to a shortage of staff or a lack of expertise.
However, some experts say governments have become overly dependent on outsourcing.
On Monday, the committee heard from Amanda Clarke, an associate professor of public administration at Carleton University. She welcomed its interest in governments’ reliance on consulting firms, which she said “betrays the principles of responsible public administration.”
When consultancies promise governments “fast solutions,” Clarke said, “those fast solutions don’t tend to be good value for money,” and that work often happens “in secret.”
However, while Clark said there are legitimate questions about McKinsey’s ethical track record, she felt the committee’s focus on it was a “distraction” from the broader issue of governments relying on consultants over the public service.
Jennifer Carr, president of the Professional Institute of the Public Service of Canada, called government-hired consultants a “shadow public service” that, in comparison to public servants, “plays by an entirely different set of rules.”
“They are not accountable to the Canadian public,” she said.
Will this controversy hurt Justin Trudeau?
Whether the government’s ties to McKinsey will prove a serious problem for Trudeau remain to be seen, said Shakir Chambers of Earnscliffe Strategies, but it’s a thread worth tugging on.
In the spirit of transparency, the public deserves to better understand the government’s relationship with McKinsey, he said. “That’s what Conservatives are trying to push for.”
Amid high inflation and economic uncertainty, Chambers believes the Tories will try to frame the controversy as a story about Liberals using tax dollars to enrich their friends — and it might stick, he added, noting other Liberal controversies regarding government procurement, such as the ArriveCAN debacle.
Looking to outside consultants for the “best possible advice” is a practice of “sound public policy,” said Greg MacEachern, an Ottawa-based consultant who previously advised the Paul Martin government.
But you’ve still got to know how to defend it, he added, and Trudeau was wise to ask whether McKinsey contracts were properly awarded.
“There’s no alchemy or science to what becomes a story,” he said. Still, he believes the opposition might have difficulty keeping Canadians engaged on this topic. “There is a lot of education involved.”.
With files from The Canadian Press.
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